Paragon to assume provision of Ground Handling Services HKIA on 13 June 2023

09 Jun 2023

Dear Stakeholders,

Kindly take note that the Supreme Court handed down judgment earlier today in respect of the above matter, as more fully set out below.

During 2014, Menzies Aviation (Namibia) (Pty) Ltd ("Menzies" — the appellant) and the Namibia Airports Company ("NAC" — the first respondent in the appeal) entered into a written agreement to provide ground handling services at HKIA. The agreement was for an initial period of five years and commenced on 1 January 2014. It lapsed on 31 December 2021 and was subject to the right of renewal for three years. New bids were invited prior to the termination date of the said agreement and a six months extension was agreed to between the parties from January 2022 to 30 June 2022, subject to a month's written notice of termination should the procurement process (in terms of the Public Procurement Act 15 of 2015 for ground handling services at HKIA) that was pending at the time be finalised prior to the termination date.

Both Menzies and Paragon Investment Holdings (Pty) Ltd in Joint Venture with Ethiopian Airlines ("Paragon" — the second respondent in the appeal) took part in the procurement process as bidders. Paragon's bid was successful. Menzies' bid was disqualified on the basis of non-compliance with certain tender conditions. Menzies took the matter to the Review Panel in terms of s 58 of the Public Procurement Act, but the review was dismissed during February 2022. Subsequently, the NAC, in terms of a letter dated-31 March 2022 gave notice of termination of the agreement between it and Menzies effective 30 April 2022.

Menzies disputed the lawfulness of the notice and in a letter on 22 April 2022, the NAC withdrew its notice of termination and informed Menzies that they stood by the termination date of 30 June 2022 as provided for in the extension of the original agreement and asked for an undertaking by Menzies that it would vacate the NAC premises when the agreement between NAC and Menzies expires. Menzies refused to give an undertaking to this effect. On 27 May 2022, NAC launched an urgent application seeking a declaratory order that the agreement would terminate on 30 June 2022 and that Menzies would be obliged to, on that day, cease to provide ground handling services to NAC and give vacant occupation of the premises to the successful bidder, i.e., Paragon.

The High Court handed down judgment in favour of the NAC on 29 June 2022 and ordered Menzies to vacate HKIA on 30 June 2022. Menzies appealed the High Court judgment and an appeal hearing in this regard took place in the Supreme Court on 19 April 2023. Today at 10:00 a.m., the Supreme Court dismissed Menzies' appeal with costs.

In a unanimous appeal judgment written by Justice Theo Frank, with Justice Sylvester Mainga and Justice Elton Hoff concurring, the Supreme Court averred that the rule of law demands that Menzies' unlawful hold over the premises and forcing NAC to make use of its services should be put to an end. The judgment emphasized that as Paragon was awarded the bid and that award had not been set aside, Paragon should be allowed to act in accordance with the bid as it is willing to do.

The Supreme Court further stated that Menzies stayed on rendering ground handling services at HKIA without any right whatsoever and refused to vacate on the basis of a fabricated defence based on a tacit relocation of an expired agreement. The judgment also asserted that Menzies had no right to remain on the premises of the HKIA and render the ground handling services after the expiry of the agreement to this effect on 30 June 2022, and it nevertheless simply refused to vacate the premises without obtaining any relief from a court of law entitling it to stay there.

The appeal judgment also asserted that Menzies relied on unlawful self-help to stay put and had to date hereof occupied the premises unlaMuIly for about a year, despite the fact that Paragon presently has the right in accordance with a bid awarded to it by the NAC to be placed in possession of the premises so as to render ground handling services at HKIA pursuant to the bid awarded to it by NAC. Finally, the Supreme Court found that Menzies resorted to selfhelp to remain in possession of the premises and hence, because of the necessity of the ground handling services, is in essence blackmailing the NAC, to use them in the meantime. The apex court also found that on the other hand it is Paragon who has been awarded the agreement to render ground handling services at HKIA, which award has not been set aside.

In the immediate aftermath of the Supreme court judgment alluded to above, Menzies sought from NAC and was granted a meeting to discuss the implementation of modalities and logistics relating to the aforesaid order of the Supreme Court.

At the meeting attended by representatives of NAC, Menzies and Paragon, NAC and Paragon, at the request of Menzies, indicated their preparedness and readiness, without derogating from the binding and immediate effect of the said court order, to work on and finalize the handover arrangements and practicalities by close of airport operations on Monday, 12 June 2023 for Paragon to commence ground handling operations on Tuesday, 13 June 2023.

NAC will, to the extend necessary in the intervening period, during the handover process keep all interested stakeholders informed.


Namibia Airports Company